Cryptocurrencies: Should You Invest In Them
Bitcoin and other cryptocurrencies have been growing in popularity, but if you’re considering investing in them, there are some key things you should know first.
Beyond learning the basics of cryptocurrencies, investors should keep the myriad risks in mind, including that the value of even the most popular cryptocurrencies have been volatile, the market isn’t very transparent, transactions are irreversible, consumer protections are minimal or nonexistent, and regulators haven’t clarified their approach to regulating them. We suggest that investors who want to invest in cryptocurrencies treat them as a speculative asset using funds outside a traditional long-term portfolio.
Let’s take a closer look at some of the issues surrounding them:
Crypto Is Not Regulated
Many crypto-assets and other digital assets are commonly not considered to be financial products. Because of this, the platforms where you buy and sell crypto may not be regulated by ASIC. This means you may not be protected if the platform fails or is hacked.
When a cryptocurrency fails, investors will most likely lose all the money they put in. In most countries, cryptocurrencies are not recognised as legal tender. You’re only protected to the extent that they fit within existing laws.
How Safe Is Cryptocurrency To Buy And Invest In
As of 2021, the market cap of cryptocurrency as an asset class has reached nearly $2 trillion, with institutional investors and companies adding Bitcoin, Ethereum, and other altcoins to their balance sheets.
But with a technology that is still less than 15 years old, many investors are worried about investing in crypto, particularly with stories of exchange hacks and stolen funds permeating the news cycle.
So, is cryptocurrency safe to invest in? Is owning cryptocurrency safe? Lets review the basics of investing in cryptocurrency and some of the inherent risks involved to help you decide whether owning and investing in crypto is right for you.
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Is Bitcoin Bad For The Environment
The digital currency uses as much power as the Netherlands every year, with just 30 countries using more energy, according to researchers from the University of Cambridge.
Computers that mine bitcoin use up to 1% of the worlds electricity supply.
While some of bitcoins consumption is renewable , fossil fuels are still being used to power the mining and servicing of the digital currency.
This is why electric car manufacturer Tesla has stopped accepting crypto payments, causing bitcoin to fall. Find out more in our Guide to eco-friendly cryptocurrencies.
Cons: Why Investing In Compound Could Be Risky
Aave by far is Compounds biggest issue. Aave is one of the most popular lending platforms in the market but the two differ in the products they offer crypto holders and how they function.
While Compound might be leading the way by getting institutional money into crypto-lending and DeFi, but it doesnt mean that it will be the last and most successful.
Furthermore, we also need to consider potential DeFi regulations that could be put into place in the next few years.
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Is Cryptocurrency Safe Should I Invest In It
Cryptocurrency has made billionaires out of novice investors. Many times, we have thought the price of Bitcoin couldnt soar any higher, and yet, it does.
New coins and crypto-exchanges continue to flood the market and continue to try to attract the average investor. Naturally, its enticing, but its also incredibly difficult to grasp.
There are plenty of ways to invest your money and choosing the next hot thing doesnt always pan out. While some have surely hit it big, theres no guarantee youll make anything off of investing in cryptocurrency.
Butis cryptocurrency safe? Read on to understand the risks of cryptocurrency and what I, personally, think about this type of investment.
How Do I Invest In Brand New Cryptocurrencies
Investing in new cryptocurrencies is easy, as most trading platforms now offer a selection of digital currencies to trade. We recommend partnering with eToro, as this platform offers low trading fees and over 70 cryptos to invest in.
This article was written for Business 2 Community by Connor Brooke.
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How To Keep Your Bitcoin Safe
Hackers can gain access to individuals crypto wallets or breach entire cryptocurrency exchanges to steal their holdings. Thats why its essential to store your crypto in a safe place, and practice good digital security habits.
Cryptocurrency exchanges and third parties offer storage for your coins through hot wallets, which are secure, but still online . Crypto held on an exchange or in a wallet is not FDIC-insured like money in the bank. Make sure you trade and hold your crypto on a platform that offers robust security measures including keeping a significant amount of holdings in its own cold storage and two-factor authentication for users. Some exchanges may even have private insurance policies in case of theft or hacking.
For the best protection against online fraud, many experts recommend cold storage through an offline device not connected to the internet, similar to a USB drive. But even cold storage comes with risks, like the possibility of losing access to your investment completely if you forget your password.
What Is The Sec’s Take On Cryptocurrencies
The Securities and Exchange Commission generally has been skeptical of cryptocurrencies, with chairs expressing concern that the product is too volatile, that investor protections are inadequate, and that regulations are insufficient. The agency has rejected multiple applications for exchange-traded funds that invest directly in Bitcoin over the last several years.
In August 2021, SEC Chair Gary Gensler said that he was open to the idea of ETFs that invested in cryptocurrency futures, but not those that invested in the spot markets, because the futures markets are already regulated by the Commodity Futures Trading Commission. In October 2021 the first two Bitcoin futures ETFsthe ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF were approved and launched. While it’s likely that more will soon follow, initially they will be limited to Bitcoin and Ethereum, as those are the only two cryptocurrencies for which an active futures market is currently established.
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How To Buy New Crypto Coins On Etoro
Finally, many of the projects mentioned on our list of new cryptocurrencies can be purchased by partnering with eToro one of the worlds most popular online brokers. With that in mind, the steps laid out below provide an easy-to-understand walkthrough of the investment process:
- Step 1 Create an eToro Account: Head to eToros homepage, click Start Investing, and provide an email address, username, and password to create an account.
- Step 2 Verify Account: Verify your eToro account by completing the required KYC checks before uploading proof of ID and proof of address .
- Step 3 Make a Deposit: Deposit at least $10 into your eToro trading account via credit/debit card, bank transfer, or e-wallet .
- Step 4 Search for Crypto: Type the name or ticker symbol of the coin youd like to invest in into eToros search bar and click the Trade button.
- Step 5 Buy Crypto: In the order box that appears, enter your desired position size and click Open Trade.
Cryptoassets are a highly volatile unregulated investment product.
Top 5 Blockchain Stocks To Buy In 2022
If youre interested in learning how to capitalise on the revolutionary technology behind the Bitcoin network called blockchain, then you are in the right place!
In this article, we go through what the technology is, some of the best blockchain companies you need to know about and five top blockchain stocks to invest in this year.
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Bitcoin The Original Cryptocurrency Is Still The Most Valuable And Trusted
- All-time high: $68,789
- All-time low: $65.53
As the granddaddy of cryptocurrency, Bitcoin was the first crypto to record financial transactions on a decentralised blockchain.
Though Bitcoin was launched more than a decade ago in 2009, Bitcoin is still the number one choice for existing and new investors, with a market cap of slightly over $815 billion.
The main purpose of Bitcoin was to revolutionise traditional financial systems and eliminate the need for government-issued currencies by enabling innovative technology and secure payment architecture.
Interestingly, in the early days, many people started buying Bitcoins because of its promising future. As Bitcoin expert Andrew Badr said: The best part of owning bitcoin is the feeling of participating in the future.
Cons: Why Investing In Ethereum Could Be Risky
Ethereum has a tonne of rivals who claim they can do what Ethereum is doing but better. Cardano, which is also on our list, is one of these rivals.
While Ethereum is the torchbearer when it comes to leading the way with blockchain technology, if rivals outmanoeuvre Ethereum, it could be quite troubling.
Another reason why Ethereum could be risky is that there is an unlimited number of coins. This means that Ethereum lacks the scarcity aspect many other cryptos have.
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Risks Of Investing In Bitcoin
The value of Bitcoin tends to fluctuate a lot. You may see the price go up or down thousands of dollars during any month. If wild fluctuations like these make you nervous, you may want to avoid Bitcoin. Otherwise, as long as you keep in mind that cryptocurrency could be a smart long-term investment, these fluctuations shouldnt be too concerning.
Another reason to reconsider investing in Bitcoin is its price. With a single Bitcoin costing more than $48,000, most people cant afford to buy whole Bitcoins. For investors who want to avoid buying a fraction of a Bitcoin, this is a negative.
Pros: Why Investing In Compound Could Be A Good Idea
Compound has been busy levelling up in the crypto-lending industry launching their new Compound Treasury, a service strictly for financial institutions where they can earn 4% fixed interest per year by investing US dollars.
This will provide a massive amount of liquidity to Compound and fuel its crypto-lending services. And with the interest in DeFi exploding in 2021, the Compound Treasury looks like a top investment for institutions.
With all this extra liquidity at their disposal, Compound could essentially become the bank of the crypto world.
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What Are Some Other Important Cryptocurrencies
Many cryptocurrencies have gained importance or hold the promise to do so. Dogecoin, for example, was a meme-based joke coin that reached fame when Tesla CEO Elon Musk promoted the token on social media. Aside from Dogecoin and the others listed above, several other bitcoin forks also exist, such as Bitcoin Gold and Bitcoin SV. Other important coins include Ripple , Solana, USD Coin, and Tezos.
Cryptocurrency Meaning And Definition
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don’t have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.
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Vulnerability To Cyber Attacks
As with any transaction done online, there is always the risk of cyber-attacks. Cryptocurrencies have been victims of the same in the very recent past. The more people buy into the idea of digital-transaction as a way to do business, the more criminals also try to find a way to capitalize on this new technology, its inevitable. This doesnt make it inherently risky, it just means there is a need to better secure the network.
Fortunately, there is a simple way to get around the risk of cyber-attack, and that is by storing your key details on an external drive. Pretty free and clear. The idea behind this is to only use your information when doing actual trading, after which you should disconnect. This reduces the chances of someone accessing your key-in data as it wont be stored online.
Bottom Line
Cryptocurrencies are a legitimate way to transfer value, and with all the extra steps taken to secure the network, these currencies have now become a great way to invest. But only if you, as the buyer, evaluate the network and make informed decisions.
Most of the risks involved can be mitigated, and with self-regulation and modern policy formulations, its safe to say that these concerns are fast becoming a thing of the past.
What do you think how safe is it to invest in cryptocurrencies? Share your thoughts on our and pages.
What Are The Main Risks Besides Volatility
In addition to volatility, another considerable risk is that cryptocurrencies arent yet regulated. Not only does that mean that there is the potential for more fraudulent behaviour, but, in theory, as weve seen in China, they could be outlawed or heavily regulated in the future.
Although, with cryptocurrencies like Bitcoin becoming legal tender in El Salvador now, thats less of a concern today.
Another risk is the complicated nature of the process. Buying cryptocurrencies and transferring them to a wallet can consist of several steps that may not be so straightforward. In addition, a simple mistake, such as sending cryptocurrencies to the wrong address, could result in the loss of funds forever.
There is also the potential for a lot of scams and other fraudulent behaviour. There are consistently new stories of cyber attacks or phishing scams where investors have their wallets drained, resulting in the loss of most or all their investments.
This is why sending your cryptocurrencies to your wallet is crucial, and even that doesnt always guarantee safety. If you keep your cryptocurrencies on an exchange, though, you dont actually own them yourself, and at any point, the exchange can just shut down and take your money.
This is why its also crucial to research the exchanges and any other apps you connect to your wallet to make sure they are reputable.
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What Is The Next Cryptocurrency To Explode 2022
There are tons of coins and tokens that may spontaneously explode in 2022, but popular cryptocurrencies like Bitcoin or Ethereum will probably be the safest bet when it comes to investment potential.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the authors opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
Solana Vision And Fundamentals :
Lets move to another blockchain platform SOLANA, it is one of the most efficient, fast, and reliable blockchain platform. It provides the facilities and environment for the development of various DApps , smart contracts, etc.
Solana is also popular as an alternative to Etherium blockchain, as it provides scalability and speed which are much better than ETH. From an investment perspective, the past record is enough. Because, in 2021 only, SOLANA has already given 17,500% of returns.
If we talk about its future potential, then we can say that it is highly bullish. But, market scenarios and news can affect the price as well.
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Bitwise Crypto Industry Innovators
BITQ holds an index of 30 crypto companies from around the globe. Some of these names derive more than 75 percent of their revenues from crypto assets.
Top holdings: Coinbase Global , Silvergate Capital , MicroStrategy , Northern Data, Voyager Digital
Expense ratio: 0.85 percent
Assets under management: $110 million
Risks Of Investing In Cardano
Even with a better network, Cardano may not be able to compete with larger cryptocurrencies. Fewer adopters mean fewer developers. This isnt appealing to most investors who want to see a high adoption rate. The platform has big plans, but there are doubts about whether it can live up to that potential.
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The Future Of Cryptocurrency In India
Although the government has currently not considered cryptocurrency as a legal currency and it is also trying to eliminate the private cryptocurrency and its use in financing illegal and unethical activities like money laundering, smuggling, drug trafficking and terror-funding, but on the other hand the government is also trying to utilise the blockchain technology to create an official digital currency issued by RBI and develop a safe, secured, legal and ethical digital economy.
This positive initiative by the Indian government towards the future of cryptocurrency in India undoubtedly indicates a bright future, but only for the official cryptocurrency. Apart from opening the doors to secured investment and trading in cryptocurrency and establishing a digital economy, officially recognising cryptocurrency will further give rise to several start-up opportunities and career options for the youth of our country in the blockchain sector.
What Are Cryptocurrencies
Before we take a closer look at some of these alternatives to Bitcoin, lets step back and briefly examine what we mean by terms like cryptocurrency and altcoin. A cryptocurrency, broadly defined, is virtual or digital money that takes the form of tokens or coins. While some cryptocurrencies have ventured into the physical world with credit cards or other projects, the large majority remain entirely intangible.
The crypto in cryptocurrencies refers to complicated cryptography that allows for the creation and processing of digital currencies and their transactions across decentralized systems. Alongside this important crypto feature of these currencies is a common commitment to decentralization cryptocurrencies are typically developed as code by teams who build in mechanisms for issuance and other controls.
Cryptocurrencies are almost always designed to be free from government manipulation and controlalthough, as they have grown more popular, this foundational aspect of the industry has come under fire. The cryptocurrencies modeled after Bitcoin are collectively called altcoins, and in some cases shitcoins, and have often tried to present themselves as modified or improved versions of Bitcoin. While some of these currencies may have some impressive features that Bitcoin does not, matching the level of security that Bitcoins networks achieve largely has yet to be seen by an altcoin.
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